MerrkdGT Gaming company is considering an investment in a new PC equipment costing $260,000. The...
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MerrkdGT Gaming company is considering an investment in a new PC equipment costing $260,000. The equipment is projected to have a 5-year lifespan without any salvage value. The anticipated annual net cash flows amount to $32,500, and the projected net income is $40,000. The company's required rate of return is 10%.
Based on the given information, calculate the following:
Cash Payback Period
Net Present Value
Annual Rate of Return
Additionally, MerrkdGT accepts investments that meet the following criteria:
Cash Payback period equal to or less than the useful life,
Positive Net Present Value (NPV),
Annual Rate of Return greater than 35%.
Considering these criteria, determine whether the investment should be accepted or not. Provide a clear answer (Yes or No) and explain the reasoning behind your decision.
Guidelines: PLEASE demonstrate your calculations for each item step-by-step and number the answers accordingly.
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